Apple's troubles began on a WSJ and Nikkei report claiming the company had slashed orders for iPhone displays in the current quarter by half of what it had originally planned, due to "weaker than expected demand".

That's interesting and could be cause for concern. Shares in the company dipped below $500 as a result, while display makers Sharp, Japan Display and LG Display all saw stock values fall as investors scrambled to protect themselves from the WSJ-summoned wolf outside the door.

What the WSJ report doesn't ask is why Apple had anticipated selling as many as 65 million iPhones. That the number was later removed from the published tale is particularly curious in light of this claim from the New York Times:

"Paul Semenza, an analyst at NPD DisplaySearch, a research firm that follows the display market, said that for January, Apple had expected to order 19 million displays for the iPhone 5 but cut the order to 11 million to 14 million. Mr. Semenza said these numbers came from sources in the supply chain, the companies that make components for Apple products."

That's significantly less of a reduction than originally reported by the WSJ -- so what's the cause?

Take a brief look at Apple's news this month and I'm going to humbly suggest one startlingly strong reason why the firm might have expected higher sales:

China Mobile

China Mobile is the world's biggest mobile network with around 703 million users. That's a huge number of customers potentially in the market for a new iPhone.

Apple CEO, Tim Cook, went to China last week when he met China Mobile chiefs to discuss "cooperation", the strongest signal yet that the two firms are preparing to introduce the smartphone to the world's biggest carrier.

Speaking during his trip, Cook pointed out what we knew already: "China is currently our second largest market. I believe it will become our first. I believe strongly that it will," he told China's state-run Xinhua news agency.

Apple has also confirmed plans to introduce the iPad and iPad mini in China this Friday.

We all know the company likes to make a big splash when it does important things -- the fact it has a press release for what's basically nothing more than introducing existing products into a new market underlines just how important the company feels China is to its business.

Wouldn't it have been nice to introduce the iPhone via China Mobile at the same time?

Speculating on this, is it foolish to imagine that Apple had hoped to bring the iPhone to China Mobile in the current quarter, but some hitches in negotiation stalled the plan?

Is it not also possible given the last few months of reports which have suggested shortages of some key iPhone components that Apple had to delay its China Mobile launch simply because it didn't feel it was yet able to supply the device in the quantity required?

In other words, Apple's original estimations for the number of iPhones it might sell in the current quarter may simply have represented company management's expectation of a China Mobile launch, a launch which has had to be delayed for a few weeks for reasons unknown. (Or, given no official statement has been made, a launch which may not happen at all).

Money problems

There's another potential reason that should be considered, and that's the economy.

Europe's streets are ravaged by riot as extraordinarily punitive 'austerity' measures are put in place. Along with targeting the poorest members of society, these measures are denting consumer confidence and reducing high street spending. That's causing further redundancies that in turn impact business, generating further redundancies.

In my opinion these austerity measures are making things worse, though others -- particularly those in government -- seem to disagree.

As European consumer confidence declines, it's inevitable that the region's consumer electronics purchases are also in decline. This impacts everyone with business interests in the region, and given the strong ties between Europe and everyone else, the ripple effect of these events is being felt worldwide.

The US economy seems similarly affected, casting its own global ripples across partner economies. Even China is affected, as sales slow so order books decline.

This is the economic situation that is affecting Apple's sales. It's worth noting that the company's sales are usually pretty resilient in tough economic times, but the effect of this extended malaise was inevitably going to be felt at some point.

The post-Christmas quarter is traditionally flat. Cash-strapped consumers are holding back on purchases. In the case of smartphones, they're choosing iPhone-like devices on the basis of price. This means those smartphones that are being sold in some territories are likely being passed along at heavily subsidized prices. This in turn means that profits on these devices are minimal. Those making those sales may be gaining market share, but they are working much harder to make revenue. It's questionable how sustainable such a business plan will turn out to be. It's inevitable that iPhone sales will be deferred in this scenario.

It's foolish to expect Apple to be completely immune to these economic realities -- and while the company has said it won't do a cheap iPhone, that doesn't mean it won't offer a high-quality alternative device which happens to be more affordable to consumers. A good, affordable device doesn't need to be a cheap one.

If nothing else the current furor offers a few hints into how Apple's management have planned to manage business in reaction to current market conditions. In anticipation of sales slowing down in the traditional markets, I suspect the intention has been to introduce the iPhone into China Mobile during the first quarter. Such a move would have grabbed sales in what remains a relatively strong economy, boosting Apple's bottom line. However, the WSJ report suggests execution of this plan has been delayed.

Personally, I'll only worry if Apple offers substantially reduced guidance figures during its financial call next week. I don't anticipate this will happen, but feel the company may find it useful to disclose if a deal between itself and China Mobile has been reached, or not.

If such a deal has been reached, that step alone should substantially reassure investors.

The bottom line is that reports of Apple's demise in the smartphone space have clearly been exaggerated. Another question might be, who profits, from such claims?